Cameron Place [2011] QBCCMCmr 4 (6 January 2011)

Last Updated: 21 February 2011

REFERENCE: 0855-2010

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	13064
Name of Scheme:	Cameron Place
Address of Scheme:	82 Cameron Street NUNDAH QLD 4012

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Scott Evans, the owner of Lot 3

I hereby order that Barard Management Pty Ltd is appointed as administrator of the body corporate for Cameron Place community titles scheme 13064 in accordance with this order: The administrator has the powers of the body corporate committee and each executive member of the committee and is authorised to carry out the functions of the committee and each executive member of the committee. The term of the appointment commences on the date of this order and ends at the end of the next annual general meeting called and held within 3 months after the end of the financial year or 30 September 2011, whichever is earlier. The administrator’s powers and functions under this order are not capable of delegation. If necessary, the administrator has the power to levy a special contribution against lot owners to meet the costs of complying with its obligations under the order and the costs of the administration. The administrator is entitled to its reasonable costs of undertaking the administration at $2,000 plus GST and disbursements per annum (or the appropriate proportional amount for a lesser period of appointment). Disbursements will be payable at the administrator’s standard commercial rates. I further order that in all other respects the application is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0855-2010

“Cameron Place” CTS 13064

The application
This application was made to the commissioner on 9 September 2010 under the Body Corporate and Community Management Act 1997 (Act). Scott Evans, the owner of Lot 3, seeks the following outcomes against the body corporate for the scheme:

1. An administrator be appointed to act in the place of the committee pursuant to sections 276(4) and 278 of the Act.
2. In the alternative, the body corporate engage a body corporate manager to perform the functions of the committee pursuant to chapter 3, part 5 of the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module).
3. Further, and in the alternative, the body corporate call an extraordinary general meeting within three months of the date of these orders submitting motions for the formation and election of a committee.
4. Any other orders that the commissioner deems appropriate.
   

On 30 September 2010, the commissioner provided a copy of the application to the owner of each lot (excluding the applicant), with an invitation to respond to the matters raised in the application (s 243, Act). Submissions were made by three lot owners. The applicant replied to submissions.

On 19 November 2010, the commissioner made a dispute resolution recommendation under section 248 of the Act referring the application to departmental adjudication.

Adjudication

Jurisdiction
An adjudicator may make an order that is just and equitable in the circumstances to resolve a dispute about a claimed or anticipated contravention of the Act; or the exercise of rights or powers, or the performance of duties, under the Act (s 276(1), Act). Without limiting section 276(1), an order may be made of a type mentioned in schedule 5 of the Act (s 276(3), Act). An adjudicator may make an order appointing a person as administrator authorising the person to perform obligations of the body corporate, its committee, or a member of the committee under the Act (s 23, schedule 5, Act).

Decision
There are six lots included in the scheme. On the basis of submissions, it is apparent the applicant and the owner of Lot 4 favour the appointment of an administrator, the owner of Lot 1 feels a body corporate manager should be engaged by owners and the owner of Lot 5 feels owners should decide the appropriate action. The owners of Lots 2 and 6 did not respond to the commissioner’s invitation to make submissions.

“The appointment of an administrator...is a significant step since it takes responsibility for the conduct of the affairs of the body corporate out of the hands of the committee and vests it in the administrator. An applicant must therefore demonstrate to the required standard that such a step is appropriate. Typically, without attempting to be exhaustive, there will be evidence that the body corporate is so dysfunctional that it cannot operate properly within the statutory framework that governs it”: Surace v Commisso [2009] CCT KA002-09 at paragraph 44.

A properly operating body corporate makes decisions about exercising its legislated functions or carrying out its legislated duties either in general meeting or through its committee in the ways stated in the Act and the Standard Module (see for example, s 44 to 57 and 64 to 97, Standard Module). The starting point for making decisions is the annual general meeting, a meeting which must be held each year within 3 months of the end of the financial year (s 66, Standard Module).
At this meeting the body corporate (amongst other things): reviews the previous year’s financial management, considers adopting budgets and fixing contributions to be paid by lot owners to pay its anticipated liabilities and expenses for the next financial year, reviews its insurance obligations, and chooses a management committee (s 13(1) and 76(3) and dictionary, Standard Module).

There must be a committee unless a body corporate manager is engaged to carry out the functions of a committee (s 7, Standard Module). Ordinarily, the committee manages the routine operations of the body corporate. It can make body corporate decisions, including decisions about spending within regulated limits (s 100, Act and s 42 and 151, Standard Module). It does things such as preparing financial budgets for body corporate consideration, preparing the agenda of a general meeting and authorising calling a general meeting. The committee’s executive members are the person/s chosen as chairperson, secretary and treasurer.

As the body corporate members are the lot owners, their relationship may affect the way the body corporate is administered. One of the applicant’s concerns is a claimed history of conflict between lot owners. He says relationships between owners make it unworkable for them to form a committee and run the body corporate to meet its legal obligations. Ms Bray and Mr Warton of Lot 5 disagree saying the rift is one owner refusing to communicate with most other owners and most owners communicate openly. They believe any rift is repairable stating the applicant has never attempted to have owners meet and reconcile their differences. In reply, the applicant submits he spent almost a year trying to contact all the owners.

While there would seem to be different views about the present relationship between owners, there is evidence of past management issues in the body corporate which may or may not have been caused by owner conflict. On 7 April 2008, an adjudicator authorised an external administrator to call, hold and chair an annual general meeting of the body corporate: Cameron Place [2008] QBCCMCmr 115 (7 April 2008). In making the order, the adjudicator noted submissions indicated the scheme was not operating in accordance with the legislation and contributions had not been properly fixed for a number of years.

The purpose of this order was to enable the body corporate to hold a general meeting so that business could be conducted to put it on a proper legal footing. The onus rested with the body corporate to operate from this time in accordance with the legislation.

However, the applicant submits, without dispute, there have been few meetings since this order was made. The owner of Lot 4 states the last annual general meeting was held in 2008. It would seem at or around this time the body corporate had engaged a person as a body corporate manager. However, it has been demonstrated that Skehan Body Corporate Managers terminated the engagement in September 2009 informing the body corporate there is no quorum for the committee. Given the order made on Cameron Place [2008] QBCCMCmr 456 (8 December 2008), the financial year end date for the body corporate is 30 June. There is no evidence of an annual general meeting being held between July and September in 2010 or that a properly elected committee is managing the body corporate in accordance with the legislation.

The applicant also states, without dispute, that the body corporate has been unable to collect levies to maintain the scheme and there is a lack of keeping records for forecasting the maintenance of the scheme. The owner of Lot 4 states levy notices were last issued in 2009. Ordinarily, the body corporate will not have made financial management decisions for a financial year about budgets and contributions payable to it by owners if it has not held an annual general meeting. Proper financial management practices are fundamental to body corporate administration. Contributions fixed by the body corporate and paid by lot owners are the major source of income to meet body corporate expenses, including those incurred to maintain common property in good condition.

Submissions refer to concerns about the maintenance of the roof and guttering system. On 11 September 2009, I dismissed an application which in part related to the body corporate doing work on or about the roof and guttering system: Cameron Place [2009] QBCCMCmr 347 (11 September 2009). In making this order, it was a relevant consideration that the body corporate had not been properly asked to determine the matters stated in the outcome sought. I stated there was material warranting the body corporate’s attention and the body corporate was on notice particular work was necessary to maintain parts of common property in good condition. I outlined ways the body corporate may deal with the issues raised in the application. At page 7 of the reasons for making the order, I stated: “If it becomes apparent that the body corporate unnecessarily delays consideration of motions proposing authorising work to maintain common property in good condition or other work required by legislation, then a dispute may arise”. There is nothing to suggest the body corporate has made a proper decision about maintaining the roof and guttering system since the above order was made. Informal gatherings of owners do not constitute body corporate meetings.

The owners of Lots 1 and 5 submit the administration issues should be left to owners. In making the order on 7 April 2008, the adjudicator stated: “if insufficient eligible persons nominate for committee membership then it is likely to be necessary to make a further order appointing an administrator for a longer period despite the likely increased costs to owners. I therefore emphasise to owners that if they do not want to pay the increased costs of full administration over an extended period then they should nominate themselves, or other eligible persons, for committee membership”. Owners have had opportunity to choose a committee or alternatively to engage a body corporate manager to carry out the functions of a committee. Importantly, the body corporate cannot now do so without an order of a nature being sought in this application.

In my view, the applicant has established it is appropriate an administrator be appointed. There has been a history of administrative problems and even though the body corporate has been on notice of the consequences should these problems persist, there is sufficient evidence it continues not to be administered in accordance with the legislation. On balance, I am persuaded by views expressed by the applicant and the owner of Lot 4 with respect to the appointment of an administrator in place of the committee. It has been shown that an appointment limited to convening a general meeting has not provided any lasting benefit to the administration of the body corporate.

The applicant refers to the adjudicator’s order in Mermaid Central [2010] QBCCMCmr 240 (28 May 2010). In my view, an order appointing an administrator in similar terms is appropriate in the circumstances. If an administrator is appointed to perform obligations of the committee or a member of the committee, anything done by the administrator under the authority given under the order is taken to have been done by the body corporate, committee or member (s 278, Act). The administrator has the powers given under the order which may include the power to levy a special contribution against lot owners to meet the cost of complying with obligations to which the order relates and the costs of the administration (s 301(2) and (3), Act). The order may fix the administrator’s remuneration which is to be paid out the body corporate funds (s 301(4)(c) and (5), Act).

The applicant has provided a copy of a letter dated 17 September from Richard Holmes, a director of Barard Management Pty Ltd, consenting to being appointed as administrator of the body corporate at a cost of $2,000 plus GST and disbursements per annum. In my view, it is appropriate in the circumstances to appoint the nominee for a period of time from the date of this order until the time by which the body corporate should have held the next annual general meeting. This period provides opportunity to put proper administrative practices in place, and to call and hold an annual general meeting. It could also be used to deal with unresolved maintenance issues.